Stamp Duty Changes – Will You Be Affected? 25 Jan 2016
Are you currently looking for a property to purchase? If you are then the ‘additional properties’ stamp duty changes announced by the Chancellor in November 2015 may affect you. Simon Nosworthy, head of residential property at Osbornes Solicitors explains the new surcharge, when it comes into effect and who it will apply to.
Why the surcharge?
The reason for the introduction of this stamp duty increase is that the government has been concerned that the surge in buy to let property investments over the past few years has prevented first time buyers from getting on the property ladder. Also it is hoped that tax receipts from this increased stamp duty will help towards expanding the affordable housing budget. The consultation document which was published on 28th December 2015 provides us with an outline of how and in what circumstances the increases in stamp duty will arise. We will have to wait a couple of months for the government to publish its responses to the consultation and we are then likely to get a final document with practical information and guidance on the new duty.
When and who will be affected?
The higher rate of tax will be 3% above the current SDLT rates and will take effect from 1st April 2016. The higher rates will only apply to purchases of additional residential property – buy to lets and second homes. Broadly speaking the higher rates will not apply if at the end of the day of the transaction (i.e. on the day of completion) an individual owns only one residential property, irrespective of use. So if as a buyer you only purchase one buy to let property and you currently rent then no higher rate is paid. This is a tax on multiple ownership rather than specifically on the buy to let market, although there is no doubt that it will be this area of the property market that is hardest hit by these changes.
Most importantly buyers of additional residential property need to have exchanged and completed by 31st March 2016 to avoid paying the higher rate of tax. Note however that if contracts were exchanged on or before 25th November 2015 but not completed until on or after 1st April 2016, the higher rates will not apply.
Other important points that need to be considered are that if a buyer owns property abroad then this will be relevant and will need to be taken into account when considering what stamp duty should be paid when buying a property in England and Wales. Also the first purchase of a property by a limited company will now be subject to the higher rates of stamp duty
The consultation is lengthy and discusses additional issues including joint ownership, married and civil partners, buying properties by parents for their children, what happens when a completion is delayed, the treatment of large scale investors and so on.
If you have any questions or queries relating to the stamp duty changes or for a no obligation quote for conveyancing, please contact Simon Nosworthy on 0207 485 8811 or by email on email@example.com.
This piece first appeared on the Portico Estate Agents in Camden blog